Validates certain findings and determinations with respect to bond anticipation notes issued by the village of Webster

Summary of specific provisions

Section 1: Determined that the village board of trustees of the Village of Webster pursuant to resolutions adopted by said village board of trustees on September 14, 2006 and September 28, 2006 and a certificate of the village treasurer of said village dated October 4, 2006 issued its bond anticipation note, dated October 4, 2006, in the principal amount of $715,000 maturing on October 3, 2007 to finance the cost of the object or purpose consisting of the reconstruction and rehabili- tation of said village's sewage treatment plant grit system. The bond anticipation note was renewed by the issuance of renewal bond antic- ipation note dated October 3, 2007 in the principal amount of $715,000 maturing on October 3, 2008. Pursuant to a certificate of the village treasurer a principal payment of $50,000 was made on said renewal bond anticipation note and said note was again renewed by the issuance of a renewal bond and said notice was again renewed by the issuance of a renewal bond anticipation note, dated October 3, 2008, in the principal amount of $565,000 maturing on October 2, 2009. Pursuant to a resolution adopted by the village board of trustees, on September 9, 2009, and a certificate of the village treasurer on October 2, 2009, a principal payment of $25,000 was made on said renewal bond anticipation note and said note was again renewed by the issuance of a renewal bond antic- ipation note dated October 2, 2009, in the principal amount of $640,000 maturing on October 1, 2010. Pursuant to a resolution adopted by said village board of trustees on September 23, 2010 and a certificate of the village dated October 1, 2010, a principal payment $20,000 was made on said renewal by the issuance of a renewal bond anticipation note, dated October 1, 2010, in the principal amount of $620,000 maturing on Septem- ber 30, 2011. Pursuant to a resolution adopted by said village board of trustees on September 29, 2011 and a certificate of the village treasur- er of said village dated October 3, 2011 a principal payment of $15,000 was made on said renewal bond anticipation note and said note was renewed by the issuance of a renewal bond anticipation note dated, Octo- ber 3, 2011, in the principal amount of $605,000 maturing on October 12, 2012.

Pursuant to resolutions adopted by said village board of trustees on September 14, 2006 and September 28, 2006 and a certificate of the

village treasurer of said village dated October 4, 2006, said village issued its bond anticipation note, dated October 4, 2006, in the princi- pal amount of $400,000 maturing on October 3, 2007 to finance the cost of the object or purpose consisting of the reconstruction, rehabili- tation, painting and metalizing of said village's water tank located at 1073 Webster Road within said village. Pursuant to a resolution adopted by said village board of trustees on September 27, 2007 and a certif- icate of the village treasurer dated October 3, 2007, a principal payment of $25,000 was made on said bond anticipation note and said note was renewed by the issuance of a renewal bond anticipation note, dated October 3, 2007, in the principal amount of $375,000 maturing on October 3, 2008. Pursuant to a certificate of the village treasurer of said village dated October 3, 2008, a principal payment of $25,000 was made on said renewal bond anticipation note and said note was again renewed by the issuance of a renewal bond anticipation note, dated October 3, 2008, in the principal amount of $350,000 maturing on October 2, 2009. Pursuant to a resolution adopted by said village board of trustees on September 24, 2009 and a certificate of the village treasurer dated October 2, 2009, a principal payment of $25,000 was made on said renewal bond anticipation note and said note was again renewed by the issuance of a renewal bond anticipation note dated October 2, 2009 in the princi- pal amount of $325,000 maturing on October 1, 2010. Pursuant to a resol- ution adopted by said village board of trustees on September 23, 2010 and a certificate of the village treasurer dated October 1, 2010 a prin- cipal amount of $305,000 maturing on September 30, 2011. Pursuant to a resolution adopted by said village board of trustees on September 29, 2011 and a certificate of the village treasurer dated October 3, 2011, a principal payment of $25,000 was made on said renewal bond anticipation note and said note was renewed by the issuance of a renewal bond antic- ipation note, dated October 3, 2011, in the principal amount of $280,000 maturing on October 2, 2012.

Pursuant to resolutions adopted by said village board of trustees on April 23, 2009 and May 29, 2009 and a certificate of the village treas- urer dated June 5, 2009, said village issued its bond anticipation note, dated June 5, 2009, in the principal amount of $500,000 maturing on June 4, 2010 to finance the cost of the object or purpose consisting of the reconstruction and rehabilitation of, upgrades and improvements to, and acquisition and installation of equipment at said village's sewage treatment plant located at 613 Webster Road, Webster, New York. There- after, pursuant to a resolution adopted by said village board of trus- tees on June 1, 2010 and a certificate of the village treasurer of said village dated June 4, 2010, a principal payment of $25,000 was made on said bond anticipation note and said note was renewed by the issuance of a renewal bond anticipation note, dated June 4, 2010, in the principal amount of $475,000 maturing on June 3, 2011. Pursuant to a resolution adopted by said village board of trustees on May 26, 2011 and a certif- icate of the village treasurer dated June 3, 2011, a principal payment of $10,000 was made on said renewal bond anticipation note and said note was again renewed by the issuance of a renewal bond anticipation note, dated June 3, 2011, in the principal amount of $465,000 maturing on June 1, 2012.

It is hereby further found that the bond anticipation notes and renewal bond anticipation notes described in subdivision (a) of this section were not issued in compliance with the applicable provisions of the local finance law, in that: (i) the village board of trustees of the village of Webster in each case had not, prior to the issuance of such bond anticipation notes, adopted a bond resolution in accordance with section 31.00 and 32.00 of the local finance law, which was subject to a permissive referendum in accordance with paragraph (a) of section 36.00 of the local finance law, for the purpose of authorizing the issuance of bonds of said village in anticipation of which such bond anticipation notes dated October 1, 2010, described in each of subdivision 1 and 2 of paragraph (a) of section 36.00 of the local finance law, a principal portion of each such note was not redeemed and the unredeemed portion of such note was not further renewed until after September 30, 2011 maturi- ty date thereof; and (iii) in the case of each of the renewal bond anticipation notes, dated October 3, 2011, described in subdivision 1 and 2 of paragraph (a) of such section, the term of said note extended more than five years beyond the date of issuance of the applicable original bond anticipation note dated October 4, 2006. Notwithstanding the defects described in section one of this act, the bond anticipation notes and renewals thereof issued by the village of Webster, as described in section one of this act, and all resolutions, acts and proceedings heretofore adopted or taken by the board of trustees and the village treasurer of said village in relation thereto, and hereby validate/ratified and confirmed. Subject to the adoption by the village board of trustees of the village of Webster of one or more bond resol- utions in accordance with section 31.00 and 32.00 of the local finance law, such village is hereby authorized to hereinafter issue: (a) bonds or renewal bond anticipation notes in the aggregate principal amount of $590,000 for the purpose of refinancing the outstanding bond antic- ipation notes issued for the object or purpose described in paragraph (1) of subdivision (a) of section one of this act; (b) bonds or renewal bond anticipation notes in an aggregate principal amount of $255,000 of the purpose of refinancing the outstanding bond anticipation notes issued for the object or purpose described in paragraph (2) of subdivi- sion (a) of section one of this act; and (c) bonds or bond renewal anticipation notes in the aggregate principal amount of $455,000 for the purpose of refinancing the outstanding bond anticipation notes issued for the object or purpose described in paragraph (3) of subdivision (a) of section one of this act; provided, however, that: (1) each such bond resolution shall not be subject to a permissive referendum in accordance with paragraph a of section 36.00 of the local finance law; (2) notwith- standing the provisions of paragraph (b) of section 21.00 of the local finance law, said village may issue one additional renewal bond antic- ipation note maturing not later than October 4, 2013 for each of the objects or purposes described in paragraph (1) and (2) of subdivision (a) of section one of this act, and may provide for the first install- ment payment on the bonds issued for such objects or purposes to be made on any date on or before October 4, 2013 and (3) in the event that the renewal bond anticipation note dated, June 3, 2011 described in para- graph (3) of subdivision (a) of section one of this act has, prior to the effective date of this act, been amended to extend the maturity date

thereof, been redeemed in full, said village, following enactment of this act, shall have the authority, notwithstanding any such extension, renewal or redemption, to issue the bonds or renewal anticipation notes described in clause (iii) of subdivision (b) of section one of this act for the purpose of reborrowing the principal amount of such redeemed bond anticipation notes up to the maximum principal amount set forth in such clause (iii).

Except as otherwise set forth in this act, the bonds and bond antic- ipation notes, and renewal thereof, issued pursuant to this act shall be issued in accordance with the provisions of the local finance law. If any clause, sentence, subdivision, paragraph, section or part of this act be adjudged by any court of competent jurisdiction, to be invalid, such judgment shall not affect, impair or invalidate the reminder there- of, but shall be confined in its operation to the clause, sentence, subdivision, paragraph, section or part thereof directly involved in the controversy in which such judgment shall have been rendered.

Justification

Necessity for Corrective Legislation: Under the State Local Finance Law, in order to authorize the insurance of either bonds or bond anticipation notes for a capital project, the Village Board of trustees is required to adopt a bond resolution. Among other things, the bond is required to include the following:

i. A description of the specific project that is to be financed by the bonds and a statement of the maximum amount of bonds and BANs authorized to be issued.

ii. A statement of the "period of probable usefulness" for the project being financed by the bonds. The period of probable usefulness is the maximum term over for which bonds or any bond anticipation notes can be issued for the project. The local finance law sets forth specific peri- ods of probable usefulness for each type of the project for which a municipality can borrow.

iii. A determination of whether or not the bonds and/or BANs are to have a term of either greater than 5 years or less.

The Local Finance Law also requires that if the term of the borrowing is to be greater than five years, the bond resolution be subject to a "permissive referendum". If a bond resolution is subject to a permissive referendum, then a notice thereof must be published once in the Village's official newspaper for legal publication purposes not later than 10 days after adoption of the resolution. Following such publica- tion, if a petition is submitted to the Village Clerk within 30 days after the date of the adoption of the resolution signed by at least 20% of the qualified voters in the Village requesting that a referendum be held on the bond resolution, then the village must then hold such refer- endum. A bond resolution that is subject to a permissive referendum does not become effective until 30 days after the date of adoption, if such a petition was filed.

Section 2 of the draft legislation provides that, notwithstanding the failure of the Board of Trustees to adopt the bond resolutions, and the other defects noted above all actions undertaken by the village Board and the village officials to date with respect to the BANs are vali- dated, ratified, and corrected. Further, Section 2 specifically author- izes the Village to issue its serial bonds or bond anticipation notes in the following respective amounts: $590,000 for the sewer treatment plant grit system financing; $255,000 for the case of the water tank financ- ing; and $455,000 for the sewer treatment plant equipment financing. This authorization is subject to the following conditions:

(a) The Village Board of Trustees is required to adopt a bond resolution for each of the three projects, but such bond resolutions would not be subject to a permissive referendum as otherwise would be required by law.

(b) With respect to the two BANs maturing on October 2, 2012 for the water tank project and the sewer treatment plant equipment project, the Village would be authorized to issue one more renewal BAN maturing no later than October 4, 2013 (the anniversary date of the original BAN for each project) and to issue its serial bonds to refinance such BANs no later than October 4, 2013. This authorization is intended to provide the Village with some flexibility as to the timing of the serial bonds to be issued for the project, in the event that the special legislation is enacted on a date that is too late to allow for the issuance of bonds prior to October 2, 2012.

(c) In the event that the corrective legislation had not been enacted prior to June 1, 2012 maturity date of the outstanding BAN for the sewer treatment plant equipment project and the Village either extends the maturity of the BAN, issues another renewal BAN, or pays off the BAN in full, the Village, would nevertheless be authorized to issue bonds to refinance the extended, renewed or redeemed BAN.

Prior legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.